Analysts are indicating that the recent pullback of Bitcoin is a typical cool-off period following its impressive +122% surge last year. Currently, Bitcoin (BTC) is hovering around $89,000, with experts asserting that this decline is well within the bounds of a healthy market correction rather than signaling the onset of a prolonged crypto winter.
In a recent post on X, Bloomberg ETF analyst Eric Balchunas remarked that Bitcoin has merely returned some of the excess gains from its previous year”s rally. He emphasized that even if the market closes 2025 flat or slightly lower, the cryptocurrency would still preserve its average annual growth rate of 50%. “Assets are allowed to cool off once in a while, even stocks. People are overanalyzing it in my opinion,” Balchunas stated.
Moreover, Balchunas dismissed comparisons of Bitcoin to the historical tulip bulb bubble, noting that tulips experienced a collapse after a three-year mania, whereas Bitcoin has withstood over six major market crashes, regulatory challenges, exchange failures, halvings, and global shocks over its 17-year history. He pointed out that Bitcoin”s endurance sets it apart, likening it to other non-productive assets like gold and rare art that maintain value without solely depending on market euphoria.
As December commenced, US-driven selling pressure has been noted as a contributing factor to Bitcoin”s recent price decline. According to CryptoQuant”s Coinbase Premium Index, the premium turned negative in late November and early December, a trend typically observed during portfolio rebalancing and tax-related moves by US institutions during this time of year. This pattern has historically resulted in either a temporary halt to rallies or exposure of underlying market stress.
This year, however, the market saw a quick recovery, with the premium returning to positive territory within a matter of days, suggesting that the selling pressure may have subsided, allowing US demand for Bitcoin to resurface. The future stability of Bitcoin”s price may largely hinge on US liquidity, behavior in the derivatives market, and incoming capital flows.
Another analyst from CryptoQuant, Carmelo Aleman, highlighted the recent decrease in Open Interest (OI) across various exchanges, suggesting that the simultaneous drop in price and OI is indicative of futures closure rather than outright spot selling. Aleman mentioned that a lower OI helps eliminate excess leverage from the market, diminishing the effects of short-term derivatives that can create false momentum. He echoed Balchunas”s perspective that this phase signifies a reset rather than the beginning of a bearish market.
The interaction between rising prices and increasing OI often indicates fragile, leverage-driven rallies lacking genuine demand. As the market adjusts, it will be crucial for investors to monitor these dynamics to gauge the true health of Bitcoin and the broader cryptocurrency landscape.
